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Meet Verily: Alphabet's Rebranded Google Life-Sciences Division

Source: Alphabet.

But can it be a business?

Given the brain trust it appears to have assembled and its own deep pockets, Alphabet stands a reasonable chance to create watershed treatments for some of today's most complex problems. However, from a shareholder's perspective, this is only one side of the equation.

For now, investors don't have much visibility into the financial condition of Verily and other moonshot projects. But they won't have to wait long. In January, Alphabet will report its first earnings under its new corporate structure, which will contain Google and "other bets," including Verily. Estimates on Alphabet's current "other bets" burn rate varies wildly from $500 million to as much as $4 billion annually.

But while some moonshots such as Verily probably burn money today, other side projects are producing profits. Through investing in some home-run start-ups such as Uber over the years, Google Ventures probably sits on billions of dollars in paper gains today. This doesn't help from a short-term cash-flow perspective, but that isn't necessarily a problem for Alphabet, which can probably use some of its new businesses to finance others. That situation, of course, could change if either the VC market hits a rough patch or costs for moonshots such as Verily or self-driving cars dramatically increase.

Ultimately, though, retail investors' opinion of Alphabet's various projects is irrelevant. Because of Alphabet's three-tiered stock structure, voting power remains under control of the company's three original core executives -- Larry Page, Sergey Brin, and Eric Schmidt. So while Verily and other moonshot efforts could someday have a meaningful economic impact, you're stuck with them either way when you invest in Alphabet. Here's to hoping the moonshots pan out for investors.

The next billion-dollar iSecret

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Tech site Re/code summarized Alphabet perfectly, characterizing the tech holding company as a "high-tech university subsidized by search ads."

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article Meet Verily: Alphabet's Rebranded Google Life-Sciences Division originally appeared on Fool.com.

Andrew Tonner owns shares of Apple. The Motley Fool owns shares of and recommends Alphabet (A shares), Alphabet (C shares), and Apple. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

Copyright © 1995 - 2015 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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